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TMI Blog2017 (1) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Learned Commissioner of Income Tax (Appeals) erred in ignoring the fact that the appellant has not charged interest to any of its customers, whether Associated Enterprise or not, on delayed payment of sale consideration by them. 3. The Learned Commissioner of Income Tax (Appeals) erred in not appreciating the fact that the learned Assessing Officer had made the addition without establishing the fact of charging of interest by the appellant to customers making payment after expiry of credit period. 4. The Learned Commissioner of Income Tax (Appeals) erred in rejecting reliance placed by the appellant on A.P.(DIR Series) Circular No. 91 dated April 1,2003 stating that there shall be no prescription of any time limit for realization of exports made by units in SEZ. 5. The Learned Commissioner of Income Tax (Appeals) erred in stating that the appellant did not have a uniform practice of charging interest to debtors, whether Associated Enterprise or non AE. 6. The Learned Commissioner of Income Tax (Appeals) erred in not dealing with Ground no. 3 of the appeal in relation to whether adjustment to international transaction of sale to Associated Enterprises could have been m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and exporting of Plain/studded jewellery and it is a 100% Export Oriented Unit(EOU). It was noticed that during the year under consideration, assessee had entered into international transactions with its associated enterprises within the meaning of section 92B of the Act on account of purchase of raw material and fixed assets, sale of finished goods and other services. As a consequence, in terms of section 92(1) of the Act, income from international transactions was required to be computed having regard to the arm's length price and, therefore, the Assessing Officer made a reference to the Transfer Pricing Officer under section 92CA(1) of the Act for computation of arm's length price in relation to the international transactions entered into by the assessee with its associated enterprises. In terms of order passed under section 92CA(3) of the Act dated 09/05/2013 the Transfer Pricing Officer has not made adjustment in respect of any of the any of the international transactions entered into by the assessee with its associated enterprises. However, the Transfer Pricing Officer noted that the assessee was making export sales to its associated enterprises as well as to non-ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court upheld the decision of the Tribunal, whereby the addition made by way of notional interest on outstanding amount of export proceeds realized belatedly from the associated enterprises was deleted. On the strength of the said judgment, the Ld. Representative for the assessee sought to point out that in the present case too, it is clear that assessee has not charged interest on belated recovery of its sale proceeds either from the associated enterprises or from non- associated enterprises. In this connection our attention has been drawn to the Statement of Facts furnished before the CIT(A), wherein is placed a tabulation showing the time lines in the recovery of sale proceeds from associated enterprises and non- associated enterprises. 5.1 We have perused the said details in the light of the principle approved by the Hon'ble Bombay High Court in the case of Indo American Jewellery (supra). It was a common point between the parties that there was uniformity in the act of the assessee in not charging interest for the belated recovery from its associated enterprises as well as non-associated enterprises, but in so far as the issue as to whether the delay in ultimate realiz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricing Officer after allowing the assessee a reasonable opportunity of being heard in accordance with law. 5.4 Thus, so far as Grounds to appeal No.1 to 6 are concerned, the assessee succeeds for statistical purposes. 6. In so far as, Grounds of appeal No.7 & 8 are concerned, the same arises from the action of the lower authorities in holding that brought forward losses amounting to Rs. 2,14,77,088/- pertaining to assessment year 2009-10 are required to be reduced from the business income before allowing the deduction under section 10AA of the Act . 6.1 In this context, relevant facts are that in the computation of income assessee had brought forward business loss from assessment year 2009-10 of Rs. 2,14,77,088/-, which was available for set-off. Out of this, assessee company claimed a set-off of Rs. 63,96,770/-, after claiming deduction under section 10AA of the Act. However, the Assessing Officer set-off the brought forward loss of Rs. 2,14,77,088/- before allowing deduction under section10AA of the Act. As a consequence the Assessing Officer restricted the claim for deduction under section 10AA to Rs. 52,42,006/- as against an amount of Rs. 2,06,33,279/- claimed in the return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lting Pvt. Ltd.(supra), the Assessing Officer adjusted the brought forward loss of earlier years before the arriving at the income eligible for the deduction under section 10B of the Act. The Hon'ble High Court considered the objection of the Assessing Officer and found it untenable by making the following discussion:- "Section 10A is a provision which is in the nature of a decision and not an exemption. This was emphasised in a judgment of a Division Bench of this court, while construing the provisions of section 10B, in Hindustan Uniliver Ltd. vs. Deputy CIT (2010) 325 ITR 102 (Bom) at paragraph 24. The submission of the Revenue placed its reliance on the literal reading of section 10A under which a deduction of such profits and gains as are derived by an undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years is to be allowed from the total income of the assessee. The deduction under section 10A, in our view, has to be given effect to at the stage of computing the profits and gains of business. This is anterior to the application of the provisions of section 72 which has been made by the Legislature while incorpora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th regard to the deduction allowable under section 10A of the Act as to whether the set-off of business loss pertains to the eligible or non-eligible unit. Nevertheless, the objection of the Revenue stands settled by the Hon'ble Bombay High Court in subsequent decision in the case CIT vs. Techno Trap and Polymers Pvt. Ltd., ITA No.2134 of 2013, dated 5th December, 2015. In the said case, the question of law before the Hon'ble High Court was as under:- "(i) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the brought forward unabsorbed loss/depreciation of the assessee's 10B unit was not liable for set off against the current year's profit of the same 10B unit." A perusal of the aforesaid would show that in the case of Techno Trap and Polymers Pvt. Ltd. (supra), the brought forward loss related to the very same unit, for which the claim of deduction under section 10B was under consideration. The Hon'ble High Court dismissed the stand of the Revenue and the following discussion is reproduced in this context:- "4. Mr. Suresh Kumar, learned Counsel for the Revenue does not dispute that the question as framed is cov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ka High Court in the case of CIT vs. Himatasingike Seide Ltd 286 ITR 255 (Kar). It has also been noted by the CIT(A) that the said decision of the Hon'ble Karnataka High Court has been upheld by the Hon'ble Supreme Court. In this context, it may only be said that this facet of the controversy has also been taken note of by the Hon'ble Bombay High Court in the case of Techno Trap and Polymers Pvt. Ltd. (supra) as is evident from the extract of the decision reproduced above. According to the Hon'ble Bombay High Court, the decision of the Hon'ble Karnataka High Court in the case of Himatasingike Seide Ltd.(supra) deals with the provision of law different from the law applicable in the subsequent period, which is also a fact position in the case before us. 6.4.4 Apart therefrom, it is also abundantly clear that the decision in the case of Himatasingike Seide Ltd.(supra) related to set-off of brought forward unabsorbed depreciation, which stands on a different footing. For all the above reasons, and having regard to the judgments of the Hon'ble High Court in the case of Black And Veatch Consulting Pvt. Ltd.(supra) and Techno Trap and Polymers Pvt. Ltd. (supra), it has t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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